When two sovereign states do business together, there should be mutual respect for the other’s autonomy. The Act of State Doctrine is intended to help further this belief. The Act of State Doctrine is a legal principle that helps to protect the courts of one country from passing judgment on or interfering with the legality of actions taken by another sovereign state within its own territory. 

Put simply, this Doctrine serves to prevent the courts of Country A from questioning the domestic acts of Country B’s government. It is intended to boost the stability of international relations by encouraging respect for one another’s independence. 

In the landmark case of Banco Nacional de Cuba v. Sabbatino (1964), it was established that “an official act of a foreign sovereign, performed within its own territory, should be recognized by United States courts as valid, regardless of its character under the private law of the foreign state.”

The Act of State Doctrine has been treated by the United States Supreme Court as a rule of federal common law. This means that it is binding on state courts and is also subject to modification by Congress. 

Elements of the Act of State Doctrine

There are specific elements that comprise the Act of State Doctrine. These elements include the following:

  1. The actions are part of sovereign authority. The Doctrine applies to actions taken by foreign governments within their official roles as part of their autonomous authority and within their own territory.
  1. The validity of acts by one country’s government cannot be decided by another’s. Courts in one country are not to question whether actions taken by another country’s government are valid and legally binding. Rather, any questions on legality should be resolved through political channels. 
  1. There is a presumption of validity. The acts of a foreign sovereign government are presumed to be valid and therefore should be recognized by courts in other countries as valid so long as there isn’t strong evidence proving otherwise. 

Exceptions and Limitations of the Doctrine

The Act of State Doctrine is not required by international law and has its own exceptions and limitations. For instance, if a foreign sovereign’s government acts in a manner that violates international law, such as genocide, sometimes courts would be willing to consider the issues in question. Courts may step in if the issue directly impacts the rights of individuals or involves private commercial dealings. While the Doctrine applies to expropriations of property within a foreign state’s borders, it does not apply to the expropriation of bank accounts that are held within the U.S. 

Other exceptions include the following:

  • When a treaty provides a clear rule for a court to apply
  • When a foreign government waives the Doctrine through an agreement 
  • When a foreign government waives the Doctrine through the failure to raise the issue within a reasonable amount of time

It’s also notable that in its most recent decision concerning the Doctrine, the United States Supreme Court wrote that “The act of state doctrine does not establish an exception for cases and controversies that may embarrass foreign governments, but merely requires that, in the process of deciding, the acts of foreign sovereigns taken within their own jurisdictions shall be deemed valid.”

Ultimately, the Act of State Doctrine serves as an example of some of the principles of international law, promoting non-interference in another country’s domestic affairs and helping to foster cooperation among nations. 

One of the biggest issues surrounding the Act of State Doctrine is that not every country recognizes it and therefore some countries make international transactions and dispute resolution very challenging. 

Consult with an Experienced International Law Attorney

Overall, the Act of State Doctrine is a very important foundation for international law, emphasizing that nations should be able to operate without unnecessary interference from other nations. Adherence to the Doctrine only serves to promote diplomatic relations with countries around the world. However, it’s clear that compliance with the Doctrine can prove difficult when you don’t have a comprehensive understanding of the various nuances. That’s why consulting with a qualified international law attorney can make all the difference. 

U.S. Counsel Services for Foreign Businesses 

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